Duties Bill
| About this Item |
Speakers | Debus Mr Bob |
Business | Bill, First Reading, Second Reading |
DUTIES BILL
Bill introduced and read a first time.
Second Reading
Mr DEBUS (Blue Mountains - Minister for Corrective Services, Minister for Emergency Services, and Minister Assisting the Minister for the Arts), on behalf of Mr Knight [11.38 a.m.]: I move:
That this bill be now read a second time.
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This bill is the next major legislative step in the Government’s program of micro-economic reform of State taxes and is the outcome of work commenced with the express approval of the Opposition during its time in government. The primary purpose of the bill is to replace the current Stamp Duties Act with simple, clear and equitable legislation drafted in contemporary language and modern style. The proposed Act will enhance the prospect of uniformity across jurisdictions, with particular emphasis being given to removing double duty on cross-border transactions. Many of the proposals in the exposure draft were developed in consultation with revenue offices in Victoria, Tasmania, South Australia and the Australian Capital Territory.
The bill is part of a project which produced the Taxation Administration Act late last year. That legislation has been described as having a never before seen level of clarity and uniformity in State taxes. The development of this bill was prompted in part by a submission by the Taxation Institute of Australia for a national review of stamp duties. An exposure draft of the proposed legislation was circulated widely to taxpayers and their professional advisers in 1995. An extensive information and consultation program was conducted and more than 80 submissions were received on the draft. The comments received were reviewed and have been incorporated into the bill where desirable. A second draft was made available to the public in September this year, including exposure on the Internet. Once again, an extensive program of information sessions supported the exposure. More than 20 seminars for accountants, solicitors and other interested persons were conducted throughout the State. In addition, the major industry and professional organisations were specifically invited to provide comment. The consultation programs conducted during the development of this bill have ensured that the draft legislation is acceptable to a majority of taxpayers and their advisers.
Comments received have been overwhelmingly supportive of the consultative process, the general thrust of the draft legislation and the timeliness of the rewrite. The welcome comments by industry and tax advisers have created a strong expectancy that the program of rewriting stamp duties will be completed during the spring session. The bill replaces all existing stamp duties with the following duties: transfer duty, including special anti-avoidance provisions; marketable securities duty; lease duty; hire of goods duty; mortgage duty; insurance duty; motor vehicle registration duty; and a limited number of general instrument duties. In contrast to the current law the new bill is structured in such a manner that each duty head is contained in a discrete chapter. I will now comment on some of the new and special features of the bill. The transfer duty chapter continues to impose duty on dutiable transactions such as agreements, transfers and declarations of trust. However, for the first time a list of dutiable property is provided, giving taxpayers and their advisers certainty in regard to property transactions that attract duty.
The bill also introduces a number of concessions. Nominal duty will no longer be charged on agreement or deeds. These duties have generally been regarded as nuisance duties and are not cost effective to collect. The time for payment of duty has been extended from two months to three months from the date a dutiable transaction is effected or a mortgage or lease is executed. This will provide consistency with other jurisdictions. Under existing legislation stamp duty is payable implicitly on intellectual property in various circumstances. The draft bill expressly recognises this liability, introducing greater certainty in adopting a consistent policy of imposing duty on transfers of business assets, even where the transactions are conducted in different ways. The bill specifies the criteria for liability on transfers of dutiable intellectual property. It is only dutiable if transferred with existing goodwill of a business and the rights have been used or exploited in New South Wales during the preceding 12 months. It is also subject to apportionment between jurisdictions if used or exploited in more than one jurisdiction. In practice this means that intellectual property will be dutiable only if sold as part of a going concern business in New South Wales.
The current anti-avoidance provisions relating to acquisition in land-rich entities have been simplified and streamlined as a result of discussion with industry and other revenue authorities. The provisions governing the payment of duty on dealings on the Australian Stock Exchange are being updated to reflect the realities of automated trading and settlement systems for stock exchange trading. The current legislation does not deal effectively with the relatively new concept of a franchise and as a result franchises until now have been treated in an inconsistent manner across several duty heads. The bill contains specific provisions in relation to franchises including a definition of a franchise which is consistent with the Corporations Law. Loan security will now be called mortgage duty and will apply only to documents which provide property in New South Wales as security. This will exclude
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some corporate debt instruments which do not provide property as security. Under the current and proposed legislation, mortgages over property located both in and out of New South Wales are assessed to duty on the New South Wales proportion. However in some circumstances New South Wales duty can be reduced by artificially including property located in the Territories, which do not impose mortgage duty, or outside Australia.
The bill effectively apportions full duty between the Australian States, including that proportion referable to property in the Territories or outside Australia. Although genuine commercial transactions can be structured to minimise the impact of this provision it would be effective to prevent deliberate avoidance. The bill also simplifies the duty imposed on the hire of goods in order to reduce the potential for double duty. Duty will be payable only if goods are used solely or predominantly in New South Wales. The bill also expressly excludes from liability arrangements which are primarily for the provision of services. These changes are a direct result of consultation with the finance industry. The bill also provides a greater degree of clarity to life and general insurances. For duty purposes, the definition of life insurance has been adapted from the Life Insurance Act. This will provide consistency with the marketplace treatment of various policies and is introduced with the endorsement of the insurance industry.
A concession has also been provided in regard to duty on motor vehicle registrations. Commonwealth legislation exempts certain classes of people, such as people with a disability, from paying wholesale sales tax on the purchase of a new motor vehicle. The current Stamp Duties Act does not recognise this exemption when calculating the value of a motor vehicle for stamp duty purposes. Stamp duty is payable on the market value of a vehicle, which includes a nominal amount for sales tax regardless of whether it is paid. The bill provides that the value of a new motor vehicle will not include a notional amount of sales tax where the vehicle was purchased without the payment of sales tax. As I said at the outset, this bill represents a significant step in microeconomic reform. It modernises the current stamp duty legislation and has the potential to create a high degree of uniformity with other States and Territories. The clarity it provides will bring certainty and reduced compliance costs for business and the community generally in New South Wales. I commend the bill to the House.
Debate adjourned on motion by Mr Jeffery.